Proceed with caution?31st December 2009
I have been asked a number of times in recent days and weeks how I feel 2010 is going to be for UK businesses (particularly small ones).
My response has been that we are far from out of the woods yet and even though the media seem to be trying to talk us out of recession my feeling is we are far from there no matter what any official statistics may say. Historically the failure rate for businesses are higher in the period following the bottom of a recession than when going into it, and I really can't see this being any different. Indeed talking to Insolvency Practitioners recently they all expect to be busy in 2010.
The worlds economies are generally in a perilous state. The level of debt that the UK now has is unprecedented and it has to be paid for. The impending General Election is just putting off the tough decisions, and as a result things like the recent Pre Budget Report ("PBR") just glossed over the real issues. There can be little doubt that in the UK the tax take must rise significantly over the next few years and public spending must come down substantially. Add to this the threat of inflation increasing and the measures that may be necessary to control that and things don't look that good to me!
So focusing on when the official statistics say we are out of recession (when growth becomes positive) is really not the point.
Just yesterday on Twitter, Entrepreneur and TV's Dragon's Den panelist Duncan Bannatyne commented: "2010 is the year of danger for British Businesses and it is best to proceed with caution". Bang on Duncan.
If you are running a small business don't be fooled into thinking it is all going to be OK. It isn't! You need to ensure you continue to run a VERY tight ship and manage your cash flow like your whole life depends on it. Many businesses are really bad at this, make sure you are not one of them.
If you don't already have it in place ensure you monitor your cash position daily and constantly forecast out a number of weeks to know exactly what your cash is likely to do. Make sure the assumptions you make are realistic (it's only you that you are kidding otherwise) and take a worse case approach. If you need a basic template to get you going take a look here
If you need help you know where to come!!